In the SharePoint site collection, click
Site Actions, and then click Site Settings.

On the Site Settings page, under
Site Collection Administration, click Site Collection Features.

On the Features page, for the
Open Documents in Client Applications by Default feature, click
Activate (OpenInClient Feature is enabled) to open documents in the client application. ClickDeactivate (OpenInClient Feature is disabled) to open documents in the browser.

To set the default open behavior for a document library by using the document library settings page

On the
<document library>: All Documents page, under Library Tools, click
Library.

In the library toolbar, click
Library Settings.

On the
Document Library Settings page, click Advanced Settings.

On the
Advanced Settings page, in Opening Document in the Browser, select one of the following options:Open in the client application When a user clicks on a document in this library, the document will open in the corresponding client application (if available).

Open in the browser When a user clicks on a
document in this library, the document will open in the Web browser Web app for that document type. When the document is opened in the Web app, the user can then decide to open the document in the client application

Use the server default When a user clicks on a document in this library,
the document will open by using the default open behavior specified for the server on which SharePoint 2010 Products is installed.

If the above do not work:

You need to invoke the Getshapshot.exe (which is located here: C:\inetpub\wwwroot\wss\VirtualDirectories\80\bin>GetSnapshot.exe)

*Note: Browse to C:\inetpub\wwwroot\wss\VirtualDirectories\80\bin>GetSnapshot.exe and make sure it is 50/56kb. I have seen instances where is is corrupt 0kb and it needs to be replaced.